Ensure compliance, avoid penalties of $500 per day, and secure your business’s future

Starting January 1, 2024, FinCEN mandates specific businesses to disclose beneficial ownership details, clarifying who truly owns or controls the company. This step bridges the gap between state and federal records, enhancing transparency around the ownership and control structures of entities registered at the state level.

Beneficial ownership refers to individuals who, directly or indirectly, wield significant influence over a company, beyond mere name representation in documents. This concept encompasses those exerting control over operational, decision-making, and financial aspects, even without formal ownership. FinCEN emphasizes the necessity of disclosing this information to enhance business transparency, combat financial crimes, and ensure organizational accountability.

FinCEN stands for the Financial Crimes Enforcement Network. It is a bureau within the Department of the Treasury in the United States. Its mission is to protect the financial system by detecting and informing about financial crimes such as money laundering and terrorism financing, aiding the authorities in their prosecution efforts.

The definition of a “Reporting Company” encompasses entities established through formal registration with state agencies, including LLCs, corporations, and limited partnerships, along with foreign businesses operating in the U.S. However, certain organizations, such as heavily regulated financial firms, tax-exempt groups, inactive companies, and those fulfilling specific operational criteria, are not required to submit Beneficial Ownership Information reports.

Entities established in 2023 or before have a deadline until January 1, 2025, for their Beneficial Ownership Information (BOI) reporting. Those set up after January 1, 2024, must file their BOI Report within 90 days following their creation.

Once the initial BOI Report is submitted, any changes in the beneficial owners or updates to the information or adjustments in exemption status must be reported within 30 days through an updated BOI Report.

Not filing your BOI Report promptly can result in civil fines reaching $500 daily, up to a total of $10,000. There’s also the risk of criminal charges, potentially leading to two years in jail.

A BOI Report typically requires disclosing the names, addresses, birthdates, and ownership percentages of individuals who directly or indirectly own or control the business. Owners are also required to report an identification number, such as a driver’s license or passport number, along with a picture of the document. A social security number cannot be used for a BOI Report.

Starting January 1, 2024, you have the option to file your BOI Report with FinCEN on your own. Opting for a service like RegClear, however, offers an accessible platform plus additional support to streamline the gathering and filing process. This approach not only saves time but also minimizes the risk of incurring severe penalties.